Reports leaked Wednesday that President Donald Trump was getting ready to fire the chairman of the Federal Reserve, Jerome Powell. The news caused markets to dip, but TACO, the popular Wall Street acronym that stands for Trump Always Chickens Out, appears to be the dish of the day, as the president denied he was going to fire Powell while speaking to reporters in the White House.
“He should have cut interest rates a long time ago. Europe has cut ’em 10 times in the short period of time, and we cut ’em none,” Trump said of Powell during a press conference with the crown prince of Bahrain, Salman bin Hamad Al Khalifa.
Trump said that high interest rates harmed people who were trying to buy a house, and then tried to claim President Joe Biden was the one who appointed Powell. “I was surprised he was appointed. I was surprised, frankly, that Biden put him in and extended him, but they did,” Trump said, before stating, “we’re not planning on doing anything,” apparently a reference to firing Powell.
Powell was nominated by Trump in November 2017 and was confirmed by the Senate in January 2018. The Fed chair’s term lasts four years, and Biden did indeed nominate Powell for a second term, though Trump tries to make it sound like he had nothing to do with Powell’s first appointment.
Trump went on to say that he would be able to make a change in about 8 months, when Powell’s second term is up. The current frontrunner to replace Powell is White House economics advisor Kevin Hassett, according to Bloomberg News, though other names include former central bank governor Kevin Warsh, Treasury Secretary Scott Bessent, and Fed governor Christopher Waller. Warsh is reportedly interested in cutting rates, though he’d previously worried about what that would do to inflation, according to Bloomberg.
“We’re doing great as a country. We have no inflation. Record stock market, record business, record everything. Everything’s a record now. We had the worst inflation in history under Biden. And now we have almost no inflation,” Trump said.
While Trump is correct about the stock market, that inflation part isn’t really true. Consumer prices rose 2.7% in June compared to a year ago, according to numbers released by the Labor Department on Tuesday. That’s up from an increase of 2.4% in May.
Trump was asked by reporters in the room who was at the top of his list for Fed chair, with names like Bessent and Warsh mentioned. The president took the opportunity to say that it’s an easy job, suggesting the only thing any Fed chair needed to accomplish was lowering interest rates.
“We have a lot of good people for that job. It’s not a tough job, to be honest. Assuming you’re smart, it’s not a tough job. If you’re a dummy, then I guess it’s a tough job. But it might be one of the easiest jobs I’ve ever seen,” Trump said.
The president went on about Powell’s renovations at the Federal Reserve that will cost about $2.5 billion. As the Associated Press notes, the renovation project has been underway since Trump’s first term, but Trump wants to make it sound like something both nefarious and new is happening that would be a pretext for firing Powell.
“He’s building a close to $3 billion little nest egg for himself,” Trump said, trying to suggest Powell was doing something illegal. “He’s not doing the right job. We should be saving a trillion dollars a year on interest. You know, when he talks about costs, we should be saving. Think of it, a trillion dollars a year. Add that with the tariffs and everything else. But he just doesn’t want to. He’s a knucklehead.”
A reporter asked if Trump was “completely ruling out the idea of firing Jerome Powell,” to which Trump replied that he doesn’t rule out anything, calling it “highly unlikely, unless he has to leave for fraud.” There’s been no evidence that Powell has committed fraud, despite the president repeatedly trying to suggest as much.
“I mean, it’s possible there’s fraud involved with the $2.5, $2.7 billion renovation. This is a renovation. How do you spend $2.7 billion? And he didn’t have proper clearance, et cetera, et cetera. So you know that’s going on. So, you know, there could be something to that. But I think he’s not doing a good job,” Trump said.
Asked directly about whether he had drafted a letter to fire Powell, something the New York Times reported Wednesday morning, Trump denied that story. But he did acknowledge meeting with a dozen congressional Republicans on Tuesday, where he asked if they thought he should fire Powell. Trump said 11 voiced approval, with one lone dissenter, but didn’t give that person’s name.
It would appear that the Republicans in the room assumed Trump was going to fire Powell after their meeting. Rep. Anna Paulina Luna, a Republican from Florida, tweeted on Tuesday that, “Jerome Powell is going to be fired. Firing is imminent.”
It’s no secret that Silicon Valley agrees with Trump that Powell should lower interest rates. Big Tech enjoyed an era of easy money that many companies would like to return to. But not only could lowering interest rates cause inflation to get worse, interest rates aren’t the only thing the Federal Reserve needs to be concerned about. Maximizing employment is also part of the Fed’s mandate, aside from keeping prices stable. Trump likes to act like interest rates are the most important issue in the entire world right now.
Nobody knows what Trump will do, obviously, even if he claims he’s not going to fire Powell. But that chaos is certainly part of his presidency, whether it comes to interest rates or bombing foreign countries like Iran. And it’s not going to stop until he’s out of office.
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